C. S. P. Singh, J. - The Additional Revision Authority, Varanasi has referred the following two questions for our opinion :-
(a) Whether on the facts and circumstances of the case, the learned A.J.R. was justified in considering the service of assessment order on an employee who had actually no authority, as proper service
(b) Whether under the facts and circumstances of the case, the learned A.J.R. was justified in dismissing the revision on the point that no application for condonation of delay had been moved, nor any medical certificate regarding the illness of Sri Mahabir Prasad had been produced
In the assessment year 1963-64, the dealer carried on business in Bhang. No regular accounts had been maintained by him and in assessment proceedings the dealer pleaded that he had a turnover below the taxable limit, and as such no tax should be imposed on him. This contention was rejected and a best judgment assessment made, and the turnover fixed at Rs. 22,500/-. An appeal was filed against this order. The appeal was dismissed as time barred. Thereafter, a revision was filed by the dealer.
2. It appears that the appeal was filed by the dealer on 29-4-1968. It was, however, found that the notice of the assessment order and demand notice had been served on one Jagannath Prasad, an employee of the assessee on 25-3-1968. The Assistant Commissioner dismissed the appeal as time barred counting the time from the date of service on Jagannath Prasad and on the finding that no good ground existed for condoning the the delay. Before the Revision Authority, it was contended that Jagannath Prasad had been dismissed from service and as such service of the revising him was not service on the dealer. This plea was not taken note of, as the revising authority was of the view that is was an after thought. It held that there was nothing on the record to show that Jagannath Prasad was a dismissed employee. The plea of the assessee that the appeal could not be filed within time as he was seriously ill was also rejected. The revising authority upheld the view of the Assistant Commissioner, Sales Tax that service on Jagnnath Prasad a servant of the dealer was sufficient service, and in this view of the matter dismissed the revision.
3. In order to answer the first question, it is necessary to set out Rules framed under the U.P. Sales Tax Act :-
'Rule 77. Modes of service. The service of any notice, summons or order under the Act or the rules may be effected in any of the following ways, namely :
(a) by giving or tendering a copy thereof to the dealer or licensee, or his manager or agent; or
(b) if such dealer or licensee or his manager or agent cannot easily be found, by leaving a copy thereof at his last known place of business or residence, or by giving or tendering it to some adult member of his family; or
(c) if the address of such dealer or licensee is known to the Sales Tax Officer, by ending a copy thereof to him by registered post; or
(d) if none of the modes aforesaid is practicable; by affixation of a copy thereof in some conspicuous place at his last known place of business or residence.
Rule 77-A. Unless otherwise provided in the Act or the Rules thereunder, anything which is by the Act or the Rules required or permitted to be done by a dealer, except when he is required to attend personally for examination on oath or affirmation may be done by a lawyer, an accountant or an authorised agent appointed by the dealer in writing in this behalf; and process served on or notice given to such lawyer; accountant or authorised agent shall be as effectual as if the same had been served on or given to the dealer in person, and all provisions of the Act or rules relating to the service of process on or the giving of a notice to a dealer shall be applicable to the service of process on or the giving of a notice to such lawyer, accountant or the authorised agent.'
We will concentrate our attention to Rule 77 as we are concerned with the case of service of notice. It is this rule which has to be primarily considered. Now, in this case, notice of the assessment order and the demand notice was served on Jagannath Prasad. The Assistant Commissioner has found that Jagannath was an employee of the applicant and as such service on him was sufficient. The notice not having been served on the dealer, the question is as to whether Jagannath Prasad could be treated as the manager or agent of the dealer. There is no finding that Jagannath Prasad was managing the affairs of the dealer qua the business and as such this aspect need not be considered. The only question is whether Jagannath could be treated to be the agent of the assessee. The finding is that he was an employee of assessee i.e. there was a contract of employment between him and the dealer. The order of the Assistant Commissioner shows that Jagannath was one of the employees of the dealer which postulates that the dealer had other employees as well. Now, if one turns to section 182 of the Contract Act, an agent has been defined as being a person employed to do any Act for another, or to represent another in dealings with a third person. Section 186 lays down that the authority of the agent may the express or implied. Section 187 lays down that an authority is said to be express when it is given by the words spoken or written, while it is implied when it is to be inferred from the circumstances of the case and things spoken, or written in ordinary course of dealings. It will thus be seen that under the Contract Act, an agent may be authorised expressly by the principal to do a particular Act or his power to do such Act may be implied from other circumstances. Neither the Assistant Commissioner, nor the revising authority have set out nature of the employment of Jagannath Prasad. The word 'employee' commodity understood in vernacular, means a servant, and the present case has been argued by the parties on this footing. Now a servant is not an agent of the master for all purpose. The distinction between an agent and servant has been considered by their Lordships of the Supreme Court in the case of Lakshminarayan Ram Gopal & Sons Ltd. vs. Government of Hyderabad through the Commissioner, Excess Profit Tax (A.I.R. 1954 SC 364). Their Lordships of the Supreme Court after referring to Halsburys Laws of England have approved of the distinction laid down by these authorities between an agent and a servant. It will be profitable to extract the decision of the Supreme Court on this point :-
'(10) The distinction between a servant and an agent is thus indicated in Powells Law of Agency, at page 16 :
(a) Generally a master can tell his servant what to do and how to do it.
(b) Generally a principal cannot tell his agent how to carry out his instructions.
(c) A servant is under more complete control than an agent,
and also at page 20 :
(a) Generally, a servant is a person who not only receives instructions from his master but is subject to his masters right to control the manner in which he carries out those instructions. An agent receives his principals instructions but is generally free to carry out those instructions according to his own discretion.
(b) Generally, a servant, qua servant, has no authority to make contracts on behalf of his master. Generally, the purpose of employing an agent is to authorise him to make contracts on behalf of his principal.
(c) Generally, an agent is paid by commission upon effecting the result which he has been instructed by his principal to achieve. Generally, a servant is paid by wages or salary.
(11) The statement of the law contained in Halsburys Law of England Hailsham Edition-Vol. 22, page 113, 'Para 192 may be referred to in the connection :
The difference between the relations of master and servant and of principal and agent may be said to be this : a principal has the right to direct what work the agent has to do; but a master has the further right to direct how the work is to be done.
The position is further clarified in Halsburys Laws of England-Hailsham Edition-Vol. 1, at page 193, Art. 345 where the positions of an Agent, a servant and independent contractor are thus distinguished :
An agent is to be distinguished on the one hand from a servant, and on the other hand from an independent contractor. A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given by him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result. An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal. An agent, as such is not a servant, but a servant is generally for some purpose his masters implied agent, the extent of the agency depending upon the duties or position of the servant.'
4. In the present case, there is no finding that Jagannath Prasad, the servant had been authorised by the dealer to receive notices on his behalf. The mere fact that Jagannath Prasad was the servant of the dealer would not entitle him to accept the notice; there is no finding that Jagannath Prasad was the agent of the dealer for the purposes of receiving the notice. Service of notice on a servant cannot be equated with service of notice on an agent. To hold that service of notice on a servant is sufficient compliance with Rule 77 would be to obliterate the distinction in law which exists between a servant and an agent.
5. Reliance on behalf of the assessee was placed on Rule 77-A of the Rules. It was urged that before a person can be treated to be an agent for the purposes of service, he must be appointed by the dealer in writing in this behalf. It is not necessary to decide whether Rule 77-A applies to cases of service of notice, for we have held that Jagannath Prasad was not the agent of the dealer for the purposes of receiving notice.
6. For the reasons given above, we answer the first question in the negative, in favour of the assessee and against the Department. We return the second question unanswered. The assessee is entitled to his costs which is assessed at Rs. 100/-. Counsels fee is assessed at the same figure.